Recently, state officials sounded the alarm that this type of fraudulent activity was increasingly widespread, prompting some to call for stiffer penalties for scam artists caught taking advantage of people willing to do anything to save their homes.

Locally, however, law enforcement officials suggested loan modification scams were actually on the decline the past six months.

KCBS’ Matt Bigler Reports:

“It appears to us that it’s starting to slow down as far as this type of crime goes,” declared detective Mark Huskins with San Jose Police Department’s fraud unit. “In the recent past six months or so, we haven’t really seen any come through.”

He credited recent, increased FBI involvement with helping to stem the problem.

“And they started picking up a lot of the cases that were going through so they can make larger, federal type of cases,” he explained.

Still, statewide, bogus loan modification scams continued. Most often, companies offered to help struggling homeowners lower their monthly payments in exchange for an upfront fee, even though that is illegal under state law. Unfortunately for the homeowner, once that upfront fee has been handed over, little or nothing is done about their often underwater loan.

California’s Department of Real Estate has received more than 4,500 complaints of loan modification fraud since 2008. Most of those cases are then referred to local police departments, sometimes with mixed results.

“The problem of course is that the law enforcement agencies are inundated with work,” said Department of Real Estate deputy commissioner Joe Carillo. “And I don’t know what priority this type of activity may have for them.”

Carillo also wondered whether this type of activity would slow or stop altogether if the penalty was increased from a misdemeanor to a felony.

“I think this would have a greater impact than just an administrative agency issuing desist and refrain orders against them,” he suggested. “And perhaps putting these persons in jail for a long period of time might deter some of this activity.”

He pointed out that many of these bogus loan officers were breaking the law from the get-go, because they are not licensed by the state.

“Many of these individuals are unlicensed to begin with,” explained Carillo. “So you have unlicensed individuals that are already breaking the law right from the inception of their activity.”